Comparison of factors influencing liquidity of European Islamic and conventional banks

Kód výsledku v IS VaVaI

<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F44555601%3A13510%2F21%3A43896295" target="_blank" >RIV/44555601:13510/21:43896295 - isvavai.cz</a>

Výsledek na webu

<a href="http://economic-research.pl/Journals/index.php/oc/article/view/1893" target="_blank" >http://economic-research.pl/Journals/index.php/oc/article/view/1893</a>

DOI - Digital Object Identifier

<a href="http://dx.doi.org/10.24136/oc.2021.013" target="_blank" >10.24136/oc.2021.013</a>

Jazyk výsledku

angličtina

Název v původním jazyce

Comparison of factors influencing liquidity of European Islamic and conventional banks

Popis výsledku v původním jazyce

Research background: The innovation in Shari.ah-compliant banking products has resulted in the rapidly increasing size of assets in Islamic banks worldwide. The assets of such banks have been growing twice as fast as those of conventional banks. Islamic banks do not depend on con ventional interest, speculation, or complex derivatives stemming from banking operations. Instead, their actions in respect of profit/risk sharing, and the clarity of the contract are consistent with Islamic Shari. ah principles, which seek to promote a more equal society. Purpose of the article: This research aims to identify and compare factors influencing the liquidity of Islamic and conventional banks in Europe. Candidate factors are sought amongst profitability,credit quality, credit expansion and capital adequacy indicators. Methodology: First, relevant financial ratios for 249 observations on Islamic banks and 2,306 observations on conventional banks are selected and compared for the period 2013-2017. Second,liquidity is explained separately for each type of banks by panel data regression to identify its determinants in a comparative context. Findings &amp; value added: The results indicate that the impact of the net interest margin on the liquidity ratio of Islamic banks is insignificant, which is obviously due to the prohibition of the use of interest (riba). To the contrary, in conventional banking a higher net interest margin results in a reduction in liquidity. Capital adequacy has a positive influence upon liquidity in both types of banks, but in Islamic banking, the influence is 5.4 times greater. The findings strongly suggest that the liquidity of Islamic and conventional banks is affected by different factors.

Název v anglickém jazyce

Comparison of factors influencing liquidity of European Islamic and conventional banks

Popis výsledku anglicky

Research background: The innovation in Shari.ah-compliant banking products has resulted in the rapidly increasing size of assets in Islamic banks worldwide. The assets of such banks have been growing twice as fast as those of conventional banks. Islamic banks do not depend on con ventional interest, speculation, or complex derivatives stemming from banking operations. Instead, their actions in respect of profit/risk sharing, and the clarity of the contract are consistent with Islamic Shari. ah principles, which seek to promote a more equal society. Purpose of the article: This research aims to identify and compare factors influencing the liquidity of Islamic and conventional banks in Europe. Candidate factors are sought amongst profitability,credit quality, credit expansion and capital adequacy indicators. Methodology: First, relevant financial ratios for 249 observations on Islamic banks and 2,306 observations on conventional banks are selected and compared for the period 2013-2017. Second,liquidity is explained separately for each type of banks by panel data regression to identify its determinants in a comparative context. Findings &amp; value added: The results indicate that the impact of the net interest margin on the liquidity ratio of Islamic banks is insignificant, which is obviously due to the prohibition of the use of interest (riba). To the contrary, in conventional banking a higher net interest margin results in a reduction in liquidity. Capital adequacy has a positive influence upon liquidity in both types of banks, but in Islamic banking, the influence is 5.4 times greater. The findings strongly suggest that the liquidity of Islamic and conventional banks is affected by different factors.

Druh

J_imp - Článek v periodiku v databázi Web of Science

CEP obor

—

OECD FORD obor

10103 - Statistics and probability

Projekt

—

Návaznosti

I - Institucionalni podpora na dlouhodoby koncepcni rozvoj vyzkumne organizace

Rok uplatnění

2021

Kód důvěrnosti údajů

S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Název periodika

Oeconomia Copernicana

ISSN

2083-1277

e-ISSN

—

Svazek periodika

12

Číslo periodika v rámci svazku

2

Stát vydavatele periodika

PL - Polská republika

Počet stran výsledku

24

Strana od-do

375-398

Kód UT WoS článku

000691601400005

EID výsledku v databázi Scopus

2-s2.0-85111646145